Data processing agreement

What is a data processing agreement (DPA)?

A data processing agreement (DPA) is a legal contract between two parties: a data controller (the entity determining how data is processed) and a data processor (a third party that processes data on behalf of the controller).

Not to be confused with an NDA, the primary purpose of a DPA is to ensure that personal data is handled in compliance with data protection regulations, such as the General Data Protection Regulation (GDPR) in the European Union. A DPA helps ensure that both parties understand their responsibilities and the necessary safeguards to protect the personal data being processed.

Why is a DPA important?

DPAs are crucial in today’s data-driven world, where personal data is an asset and subject to increasing regulation. The GDPR, for example, mandates strict rules around data handling, and a DPA helps ensure these rules are followed. Without a DPA, organisations risk non-compliance, which can lead to legal and financial penalties.

DPAs also define how personal data is processed, including what type of data is involved, the purposes for processing, and the obligations of both parties. This clarity is essential for ensuring lawful data management and protecting individuals' rights under data protection laws.

Key components of a DPA

A strong DPA typically includes several critical elements:

1. Scope of processing: Details the personal data to be processed, its purpose, and how long it will be retained.
2. Security measures: Specifies the technical and organizational steps the processor must take to protect data.
3. Rights of data subjects: Outlines how the processor will help the controller honor data subjects’ rights, such as access and deletion requests.
4. Breach notification: Requires the processor to notify the controller promptly if there is a data breach.
5. Data deletion or return: Dictates what happens to personal data once the processing relationship ends.

When do you need a DPA?

A DPA is required any time a data controller engages a third party to process personal data on their behalf. This applies whether the processing involves customer data, employee information, or other personal data. Under GDPR, a DPA is mandatory for compliance, as controllers are responsible for ensuring processors adhere to data protection standards.

Even businesses outside the EU should consider having DPAs to meet other data privacy laws like the California Consumer Privacy Act (CCPA). Having a DPA in place can protect both parties from liabilities and ensure best practices in data management.

How to draft a DPA

Drafting a DPA involves outlining key aspects of data processing and ensuring compliance with relevant regulations. While there are templates available, it’s important to tailor your DPA to your specific operations. Here are key steps to follow:

1. Outline processing activities: Detail what data is processed, why, and for how long.
2. Define roles and responsibilities: Specify the obligations of both the controller and the processor.
3. Ensure security: Include clear measures on how data will be protected.
4. Plan for breaches: Set out protocols for breach notifications.

In conclusion, a DPA is essential for lawful data processing and ensuring accountability between controllers and processors. It provides a framework to protect personal data and comply with regulations like GDPR, safeguarding both the parties involved and the individuals whose data is being processed.